Editorial: Slices of that port pie

With seats at the table, the Peninsula shouldn't lose out on its fair share

May 10, 2012

Since taking office, Gov. Bob McDonnell has pushed Virginia's ports as essential to the economic growth of the state. The governor cites their activity as generating 343,000 jobs and $41 billion in annual revenues; and there's lucrative new business on the horizon from bigger ships taking advantage of the widening of the Panama Canal starting in 2014.

With natural deep harbors and its terminals' state-of-the-art equipment, Virginia is poised to take advantage of this projected boom. McDonnell is doing his part. First, he overhauled the board responsible for the ports' oversight. Then, in the 2012 legislative session he asked for incentives for new port-related businesses, which the General Assembly killed — largely on procedural grounds.

But the governor hasn't given up. He is now proposing an economic incentives package for a "port zone" as a budget amendment that the legislature will consider next week.

We commend the governor's perseverance. Even more, we commend the expansion of the "port zone" to include Hampton and Newport News, though it doesn't excuse — or explain — their original exclusion. It still rankles that the two major cities on the Peninsula somehow escaped notice in the original proposal that called for tax credits for cities and counties lining Route 460, as well as for Warren County, home to an inland port, Virginia Beach, Norfolk, Portsmouth and Chesapeake.

Just as disappointing was the lack of any noticeable outcry from the Peninsula's leaders at this inexplicably shoddy treatment. Have they simply come to accept Cinderella status in relation to their Southside neighbors? Is there such a built-in bias to the economic needs of South Hampton Roads and expansion along Route 460 that no one on the Peninsula thought it worth kicking up a ruckus?

There was a deafening silence from the area's legislative representatives. "We were surprised and disappointed when we weren't included," came the tepid response from the Newport News' director of economic development. The current proposal for incentives expands the "port zone" to include Hampton and Newport News; it also adds adjoining cities and counties that might benefit from an infusion of port-related commerce, whether in warehouses, distribution centers or other ancillary businesses.

As it stands, the new proposal finally remedies their omission and promises the Peninsula its due. But, it's still disappointing that neither Peninsula nor regional leaders were more vigilant and that they failed to present a unified front.

In a commendable change, the amendment would extend the incentives to existing businesses for expansion. Another less welcome change, influenced by Virginia Beach state Sen. Frank Wagner, owner of Davis Boat Works in Newport News, makes the incentives outright grants rather than tax credits. By this, companies within the zone would receive cash payments based on the number of new hires, up to a limit of $500,000. The state's outlay is capped at $5 million annually.

The issue of grants versus tax credits has been a sticking point in getting passage for the incentives, with the House supporting credits and the Senate grants. Wagner has stated that there's a "tremendous amount of money out there in tax credits already" that he's not anxious to add to. One implication is that the accounting surrounding them is difficult to control. This shouldn't be so. It should be established procedure to track income and associated tax credits; if it's not, then it throws into question other tax credit incentives already employed by the port. These include a port volume increase credit and an international trade facility credit. It may be easier to just dole out money up front, but then where's the performance accountability?

The ports of Virginia are an essential component of the state's economy and they're poised for growth. As of now, Virginia has some of the best facilities on the East Coast for handling the new, larger ships and their containers.

The whole region should benefit from increased cargo and shipping. The whole region should be encouraged to establish infrastructure to support this expansion. And that includes the Peninsula.

Our communities shouldn't be an afterthought in the regional picture. Our leaders need to step up and be more vocal in keeping our economic interests front and center as an integral part of the region.